Inside Canada’s ‘very scary’ job recovery

The Vancouver Sun

November 06th, 2010
By John Morrissy

When Tara Corra-Pella and her husband, Brian, landed assembly line jobs at Ford’s engine plant in Windsor, Ont., “it was like winning the lottery ticket.”

It was 1999 and hourly wages of $34 an hour provided for ski trips for the whole family and the little luxuries that made life comfortable.

“A lot of the more senior people at Ford said you’re lucky to have this job,”she recalls. “But they always said don’t count on overtime. Put your money away. You don’t know when you’re going to be laid off.”

Neither did 417,400 other Canadians, who found themselves cast out of work by the Great Recession of 2008.

As one auto plant after another shut down or cut operations, the devastation of the financial crisis spread well beyond its epicentre in southwestern Ontario.

Few would have guessed at the time the depths to which the economy would sink, and the rebound that would follow, restoring all of the 417,400 jobs lost, and then some, a total of 425,900 positions, according to Statistics Canada.

It is an oft-repeated number, no doubt the envy of the United States, which has had much less success creating jobs, but one that hides weaknesses within, economists say.

“Quality is as important as quantity,” says Benjamin Tal, senior economist at CIBCWorld Markets. “From all directions we will see a much softer labour market in the next 12 months.”

Even before the recession set in, Tara Corra-Pella’s time had come. She got her layoff notice in 2006 and Brian’s followed shortly after in 2007.

Lauren, their youngest child, was just out of diapers, the three other kids were still young, and there was a mortgage to pay.

“It was very scary,” Corra-Pella remembers. “When we got laid off, a lot of things changed.

“We needed to figure out what our next step was going to be.”

Tara returned to school, studying to become a registered practical nurse. Brian took a course in operating heavy equipment.

On paper, they could be counted among the hundreds of thousands of people who’ve returned to work since the recession began. But the similarities pretty well end there.

She has since landed a part-time job at the Windsor Regional Hospital and Brian works full-time for a logistics company as a forklift operator.

She estimates their household income has dropped by up to 40 per cent.

In many ways, Corra-Pella’s story is symptomatic of the fundamental changes that are altering Canada’s labour market, not always for the better.

She has moved from a full-time manufacturing job with benefits, to a part-time public sector job without benefits. That story, or variations on it, is playing out in Windsor and across other Canadian cities, the numbers show.

Despite the rebound in jobs, full-time positions have not recovered. From October 2008 when employment reached its peak, they have fallen by 102,000 to be replaced by 110,400 less stable and lower-paying part-time jobs.

Neither have manufacturing jobs. Highly valued for their better wages, they have plunged by 213,700 over that stretch, continuing a trend that since 2002 has reduced the number of manufacturing jobs in this country by about 25 per cent.

Service jobs, on the other hand — often associated with lower-paying retail work — have grown by 237,500 positions.

October’s employment report, released Friday, showed the economy still struggling to create jobs. Ameagre 3,000 were added during the month, when consensus expectations were for a 15,000 advance.

After producing 51,000 jobs a month in the first half of 2010, the country has averaged only 5,700 over the past four months.

The data did show improvement in full-time employment, which rose by 47,000 positions combined with a 44,000 decline in part-time jobs. Private sector employment also advanced while self-employment fell.

“But one month didn’t reverse the prior trend,”says CIBC chief economist Avery Shenfeld. “While total employment has recovered all of the recession’s job losses, the unemployment rate is nearly three per cent above its pre-recession level, and total hours worked are still nearly a percentage point below the pre-recession level.

Taken together, these weaknesses will ripple through the economy in the form of lower consumer confidence and consumer spending, as well as weaker economic and job growth, says CIBC’s Tal.

He has created an employment quality index, which measures the labour market according to full-time versus part-time employment, compensation, self employment versus paid employment and full-time jobs by sector.

Its most recent update, released Thursday, showed that employment quality has followed the job gains higher, in fact recovering all the ground lost during the recession.

But it is unsustainable, Tal says.

“During the economic recovery, the index actually went up, but it went up because of two factor — construction jobs (related to the housing market) and government jobs (related to stimulus spending).

“Over the next 12 months we will see a significant softening in the quality of employment because I think many of those government jobs will not be there, housing has slowed and we see the manufacturing sector not recovering in any significant way because of the strong dollar.

“So you will see more unstable jobs — lower-paying jobs as opposed to high-paying jobs with benefits.”

As a result, unemployment will be stuck around eight per cent for at least another year, says Tal.

Part of the reason is that it will take 20,000 jobs a month to put a dent in the unemployment rate, estimates BMOCapital Markets economist Robert Kavcic, not the 5,700 the economy has averaged over the past four months.

“The fact is, the composition of the economy is changing,”says Kavcic, who believes those changes will benefit workers, and the economy.

“Everyone of those lost manufacturing jobs has been more than made up in the service sector. So from that sense it is good news that the economy is adjusting and making up jobs elsewhere, even if it is taking from one sector that’s traditionally been strong but just isn’t that competitive on the global stage any more.”

As manufacturing declines, so, too, does Central Canada’s role as the country’s economic heartland, and the resource-rich West picking up where Windsor for example, now sporting the country’s highest unemployment rate, left off.

Jim Milway, the executive director of the think-tank known as the Centre for Competitiveness and Prosperity, says the shift to service jobs is a simple fact of nature.

“The richer you get as an economy, the more you’re going to be carrying out services and the less you’re going to be making things.

“Manufacturing is going to evolve and we can do all we want and stamp our feet to say we can’t lose manufacturing jobs, but it’s the way of the world,” Milway says.

“Everybody thinks that the manufacturing job is some $30-an-hour guy on the assembly line in Oshawa, but a lot of them are in a lot of small little places that don’t pay very good wages. Conversely, everybody thinks that a service worker is somebody who is flipping burgers but a lot of these people are analysts, or working in financial services or doing IT.

“The challenge here is to make sure we’re growing the service sector and that we’re moving on in financial services and technology. That’s where our future lies, not in trying to rescue automotive jobs.”

Throughout it all, the hidden casualties of the recession soldier on.

“There were some very hard stories about people who couldn’t make it through the change,” says Tara Corra-Pella.

“And at the union hall, there are people who lost their Ford jobs and are now working for minimum wage — they’re very upset about what’s happened to them.

“Itried to control the things Ican control myself and as far as taking care of my family Ineeded to focus on what I can do personally and just go on from there without placing a lot of blame on people.

“You just can’t take anything for granted.”